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There are two economies at play right now and "right now they're out of sync" based on the earnings results that Wall Street has seen thus far, CNBC's Jim Cramer said Wednesday.
The American consumer is still strong, as evident in the results the banks are posting, but the railroad company CSX is telling a different tale, he said.
Shares of CSX fell more than 10% in the session after the transport giant missed on earnings per share and revenue in the second quarter. The company now believes revenue will fall as much as 2% in 2019 after originally forecasting growth as high as 2%, prompting CEO James Foote to call the economy "one of the most puzzling I have experienced in my career."
Negative results in one railroad tend to drag the rest of the industry, Cramer said. Shares of Union Pacific dropped about 6% and Norfolk Southern sank more than 7%. The former reports earnings Thursday and the latter reports next week.
The Dow Jones Transportation Average, which tracks the American transportation sector, fell more than 3.5%, its worse session this year. As of Tuesday, economists expect the economy to grow a median 1.8% in the second quarter, according to CNBC/Moody's Analytics rapid update of economists' GDP forecasts.
CSX's Foote also said "many of our customers' volumes continue to show weakness."
For the bulls expecting the Federal Reserve to cut interest rates this summer, Cramer said they better hope Chairman Jerome Powell is focused on CSX's conference call instead of what the banks are saying.
"We need Fed chief Jay Powell to listen to last night's big bad conference call from CSX," the "Mad Money" host said. "At the same time, we need him to ignore the bank conference calls, like the excellent one we got today from Bank of America. "
Bank of America told shareholders that profit in the second quarter increased 8% from a year ago, totaling $7.3 billion, powered by its retail bank. Investors earned 74 cents a share, which topped estimates of 71 cents.
Banking executives, such as Bank of America CFO Paul Donofrio, are rooting against a reduction of the benchmark interest rate — currently 2.25% to 2.5% — arguing it would slow net interest income, which has been a major driver of profits.
Retail sales last month increased 0.4% when economists predicted 0.1%, which juxtaposes what's happening in business investment.
"If you believe Bank of America, J.P. Morgan and Citigroup — and why not — consumers are right in the sweet spot, " Cramer said. "Based on what's happening in the consumer economy, you could easily make the case for more rate hikes here."
The major U.S. indexes recorded their second straight day of losses, with the Dow Jones Industrial Average and Nasdaq Composite slipping more than 0.4%. The S&P 500, falling 0.65%, posted its worst day in three weeks.
"I can't think of another time … where the consumer was in such great shape while the industrials were in so much trouble," Cramer said. "Normally the one boosts the other, or vice versa. Unfortunately, that doesn't seem to be happening right now."
Disclosure: Cramer's charitable trust owns shares of JP Morgan and Citigroup.